Bitcoin climbed back above $80,000 on Tuesday morning, extending a rally that has gathered real momentum and reignited questions about whether the flagship cryptocurrency has found its footing again.

The token rose more than 2% to $80,501, building on a stretch that saw it post its largest three-day gain since 2023, a move of over 20%. Part of that surge was mechanically amplified by a short squeeze, which forced the liquidation of more than $4 billion in bearish crypto positions, compressing selling pressure and accelerating the climb.

Several forces converged to support the move. The US Treasury’s decision to increase its purchases of longer-dated government bonds briefly pushed yields lower and revived appetite for risk assets more broadly. Growing investor unease over inflation and the trajectory of government debt has also sustained interest in assets perceived as scarce, with bitcoin benefiting directly. Bolnews reported that institutional demand has returned in force, with US spot bitcoin ETFs attracting $1.92 billion in net inflows last week, their largest weekly total since October, when bitcoin last reached a cycle peak.

Analysts are cautiously optimistic, though not uniformly so. Bitcoin had spent months in a prolonged slump before last week’s breakout and research firm BTIG noted that a comparable surge in January 2023 faded before the asset eventually steadied around its 200-day moving average.

Fundstrat took a more confident tone in a Monday note, suggesting that the buying activity following the short squeeze points to a rally that may prove more durable than a simple tactical bounce. The firm highlighted strong inflows into both bitcoin and ether ETFs, rising trading volumes and an increase in stablecoin creation, which investors typically deploy to purchase crypto assets. Options market positioning also shifted, with traders increasingly paying for exposure to price gains further out in time rather than concentrating bets on short-term moves.

One detail that stood out to Fundstrat: bitcoin advanced all of this without fresh purchases from Strategy, the world’s largest corporate holder of the cryptocurrency, which has not bought bitcoin in two weeks. A resumption of its buying programme, alongside continued ETF demand, could add further fuel to an already lively recovery.

Other tokens joined the move. Ether traded 1.17% higher at around $2,498, while XRP rose 2.6% to $1.52 and has gained roughly 50% over the past seven days, according to CoinGecko data.